A ruling from the European Court of Justice is expected to throw a wrench into Uber’s plans for international expansion.

After a disastrous 2017—one that led to the ouster of caustic C.E.O. Travis Kalanick, sparked a Silicon Valley-wide discussion of sexual harassment in tech, and threw the company’s future into limbo—Uber has been dealt more bad news. On Wednesday, the European Court of Justice (E.C.J.) ruled that the company is, in essence, a taxi company and not a digital company—a distinction of grave importance for Uber, which has long fought local regulations by claiming that it is a platform for providing transportation, and not a transportation service itself. “The service provided by Uber connecting individuals with non-professional drivers is covered by services in the field of transport,” read the ruling, which is the first of its kind to apply to Uber in the E.U., and which CNBC reports cannot be appealed. “Member states can therefore regulate the conditions for providing that service.”

The E.C.J.’s decision was based on a complaint from a Barcelona-based taxi group, which argued that Uber was not obligated to adhere to the same rules as its drivers. (In recent years, tensions between taxi groups and Uber have led to violent protests.) Specifically, it will restrict Uber from expanding its services dependent upon non-professionally licensed drivers in Europe. The ruling is the second strike against Uber in Europe this year; last month, a U.K.-based employment tribunal affirmed a decision from last year that classified the company’s drivers as employees rather than independent contractors, a designation Uber and other “sharing-economy” companies have historically used to avoid shelling out for costly employee benefits.

For a time, Uber ran a peer-to-peer service in Barcelona called UberPop, which used non-professional drivers. That service has since been discontinued, and Uber says it now primarily uses professional drivers in the European Union. That fact in itself is antithetical to the tenets of the so-called sharing economy—a service promoted by these companies’ C.E.O.s as a means for ordinary people to make a few extra bucks delivering your groceries or shuttling you from point A to point B. As such, the E.C.J. ruling, which states that the 28 countries within the E.U. must regulate “the conditions under which services are to be provided,” theoretically brings the law up to speed with conditions under which Uber claims to operate.

Uber, for its part, is downplaying the decision: “This ruling will not change things in most E.U. countries where we already operate under transportation law,” said a spokesperson for the company. The company has indeed proven resilient after changing its tune from defying regulators to working within local laws. It still operates in most E.U. countries, and restarted UberX operations in Madrid and Berlin after it had been banned in both cities.

But the ruling has wider implications for how Uber and other sharing-economy companies like Deliveroo and Foodora are regulated throughout Europe. So far, such companies have used the subtle difference in classification to insulate themselves from local regulation, often to the detriment of their workforce—the World Bank has noted that sharing-economy workers in the E.U. make 14 percent less than workers with open-ended contracts. So far, policymakers have struggled to regulate companies hell-bent on redefining the parameters of labor, but a recent string of lawsuits suggests they’re getting closer to an answer.

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